The Director-General of the Malta Employers' Association, Joe Farrugia, said this evening that the focus of the Budget appeared to be fiscal consolidation.
Many countries had realised that they could not continue to shoulder heavy debt burdens.
The government, he said, was trying to control its spending without harming the economy, by reining in spending while still spending as required in key areas to maintain the positive economic momentum.
An interesting feature in the Budget was the assistance to be given to minimum wage earners so that they could follow training courses. That, and other measures in the education sector showed that this would help those with a low income to help themselves to improve their situation.
All in all, Mr Farrugia said, this was a balanced if unspectacular Budget with a number of small, positive measures including the linkage between education and industry in the sector of innovation and the incentives for SMEs including the microcredit scheme, whose implementation should be a priority.
Other positive measures in the investment in human resources are the increased expenditure on the Employment Aid Scheme, STEPS and the setting up of an interactive centre for Sciences. There was also an allocation of funds for projects linking education with the creative industry and the setting up of the creativity trust.
The MEA noted in a statement that the increased expenditure in child care services, and incentives for second income earners through the option to pay reduced N.I.rates. It wasnot specified whether the reduced N.I. applies to employers’ contributions as well, it said.
The MEA noted with satisfaction that the micro credit scheme would be in operation in 2011. It said that this was overdue and should be implemented without further delay, together with other incentives to SMEs, among them the Gateway to Export Scheme; the Quality improvement programme; and EUOSTARTS. The tax incentives to investment in quality should also help numerous companies.
The association welcomed the scrapping scheme old motor vehicles to incentivise take up of new cars. This measure would also have an environmental impact and was a much needed measure to establish a level playing field between new car importers and the importation of second hand cars.
In spite of the positive trends in tourism during 2010, the MEA said that the increase in VAT on hotel accommodation was untimely, given that the sector was still recovering from two bad years and that austerity measures being taken abroad, particularly in the UK, night have a negative impact on tourism in 2011.
The MEA concluded by stating that the budget for 2011 was by no means an expansionary budget, as government was struggling to achieve expenditure cuts as painlessly as possible. It was evident that a number of measures proposed by the social partners, such as partial payment for maternity leave, were not taken on board because they were not affordable in the present circumstances.
However, the budget also contained incentives and initiatives to maintain the momentum in economic growth experienced in 2010, and it is only through such growth that the fiscal targets could be achieved.